Half of the 56% who havenit upgraded to Intel Macs yet plan to do so in the next six months. “Several Apple customers that are waiting to upgrade to Intel Macs
indicated that they are waiting for Adobeis fully optimized Creative
Suite before they will upgrade their hardware,” Mr. Munster explained. “We had expected that a
higher percentage of these loyal customers would have already made the
move to an Intel Mac and we see this as a sign that Apple has so far
just scraped the surface of the Mac transition opportunity.”
The analyst also believes that the iPod and iTunes “is still in
early growth stage in Europe, similar to the U.S. iPod market 4-6
quarters ago.” He based that assessment on the fact that his interview subjects own 1.6 iPods each, on average, and most of them bought their first one 2.5 years ago.
Mr. Munster also continues to expect Apple to expand its iTunes-compatible hardware by releasing the long-rumored “iPhone” within the next three to six months. Looking at American offerings in that space, he found 25 music-enabled cell phones with an average price of $317, before rebates. In contrast, he said, the average price of all the hard drive iPods sold by Apple so far is $324.
“We expect prices for music phones will stay fairly high for the next two to three quarters, given the primary buyers are still tech-centric early adopters,” the analyst wrote. “But by 2H07, music-enabled handsets will likely come down in price and be sold in significantly higher volumes.” He also cited an IDC estimate that shipments of such devices will jump from 19.5 million in 2006 to 60 million in 2008, split between Windows mobile-based handhelds and phones tied to specific music services.
In the meantime, he pointed out, “music-enabled handsets are being introduced by potential handset
maker competitors (ex: LG Chocolate) and are being met with increasing
success, Apple will likely need to get in the game fairly soon to
avoid missing the early adopters.”
Mr. Munster retained his “Outperform” rating on Appleis stock, with a $99 price target. At 1:33 PM EST on Friday, the companyis shares were selling for $73.16, down 2% for the day amid broader Nasdaq weakness tied to fears of an ailing economy.
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